WikiLeaks Document Releasehttp://wikileaks.org/wiki/CRS-RL31038

February 2, 2009

Congressional Research Service

Report RL31038

Asia Pacific Economic Cooperation (APEC), and the 2007

Meetings in Sydney, AustraliaMichael F. Martin, Foreign Affairs, Defense, and Trade Division

September 21, 2007

Abstract. The main topics of discussion during the September 2007 two-day Leaders’ Meeting and the two-dayMinisterial Meeting were climate change and regional economic integration. The Leaders issued a separatejoint declaration on climate change, which included ”aspirational” commitments to reduce energy intensity byat least 25% by 2030 and to increase regional forest cover by at least 20 million hectares by 2020. APEC’sconsensus position on the latter topic entitled ”Strengthening Regional Economic Integration,” was endorsed bythe Leaders. The APEC meetings also discussed the recent global problem with food and product safety.

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Order Code RL31038

Asia Pacific Economic Cooperation (APEC) andthe 2007 Meetings in Sydney, Australia

Updated September 21, 2007

Michael F. MartinAnalyst in Asian Political Economy

Foreign Affairs, Defense, and Trade Division

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Asia Pacific Economic Cooperation (APEC) and the 2007 Meetings in Sydney, Australia

Summary

There is apparent agreement between Congress and the Bush Administrationthat the Asia Pacific Economic Cooperation (APEC) is a potential vehicle foradvancing U.S. economic, trade, diplomatic, and security interests both globally andregionally. In particular, APEC offers the United States an organizationalcounterpoint to other proposed regional associations in Asia. However, theorganization’s approach and perspective on these issues may pose problems for theUnited States. By design, APEC operates on the basis of consensus, under which itsmembers voluntarily liberalize their economic and trade policies. As a result, APEClacks enforcement mechanisms commonly seen in other multilateral organizations.

The main topics of discussion during the September 2007 two-day Leaders’Meeting and the two-day Ministerial Meeting were climate change and regionaleconomic integration. The Leaders issued a separate joint declaration on climatechange, which included “aspirational” commitments to reduce energy intensity by atleast 25% by 2030 and to increase regional forest cover by at least 20 million hectaresby 2020. APEC’s consensus position on the latter topic entitled “StrengtheningRegional Economic Integration,” was endorsed by the Leaders. The APEC meetingsalso discussed the recent global problem with food and product safety.

For the Bush Administration, the APEC meetings provided an opportunity toreiterate its interest in forming a Free Trade Area of the Asia-Pacific (FTAAP) andto hold bilateral talks with a number of important Asia leaders. During the APECmeetings, Australian Prime Minister John Howard and President George Bush signedthe U.S.-Australia Defense Trade Cooperation Treaty. Also, during his speech to theAPEC Business Summit, President Bush proposed the creation of an “Asia PacificDemocracy Partnership.” Some APEC members were critical of the departure ofPresident Bush and Secretary Rice prior to the end of the Leaders’ Meeting.

Proponents of greater U.S. involvement in APEC argue that the associationprovide the United States with a vehicle to re-energize its involvement in Asian tradediscussions and to take a more active diplomatic role in the region. They suggest theUnited States should increase its financial assistance to APEC, through the annualcontribution and specific assistance programs, and alterations in U.S. laws andpolicies on key issues. Others maintain that APEC may not be an effectivemechanism for advancing U.S. interests in the region.

The President’s initiatives at Sydney present the 110th Congress withopportunities to weigh in on the issue. Congress may take up the issue of the currentlevel of direct and indirect financial support for APEC. Also, Congress may considerAPEC’s goals of trade and investment liberalization when legislating on variousother programs. In addition, the Senate faces consideration of the new defense treatywith Australia.

This report will be updated as circumstances warrant.

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Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

APEC’s Approach to Trade Liberalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

APEC Organization and Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Results of the 2007 Meetings in Sydney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Outcomes of the Major Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Climate Change, Energy Security, and Clean Development . . . . . . . . . 7WTO Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Regional Economic Integration and Free Trade Agreements . . . . . . . . 8Trade and Investment Liberalization and Facilitation . . . . . . . . . . . . . . 8Human Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Strengthening APEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Other Important Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Noteworthy Bilateral Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Australia and Prime Minister Howard . . . . . . . . . . . . . . . . . . . . . . . . . 12China and President Hu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Indonesia and President Yudhoyono . . . . . . . . . . . . . . . . . . . . . . . . . . 13Japan and Prime Minister Abe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Russia and President Putin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14South Korea and President Roh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14ASEAN Leaders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Assessment by the Bush Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Progress on a FTAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Regional Economic Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16WTO Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Concerns about Meetings in Lima . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Comments from the Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

APEC and International Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Assessing APEC’s Impact on Exports and Imports . . . . . . . . . . . . . . . . . . . 18APEC as a Vehicle for Liberalizing Trade . . . . . . . . . . . . . . . . . . . . . . . . . 20

APEC and “Human Security” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Counterterrorism and Secure Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Diseases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Natural Disasters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Implications for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Previous Congressional Actions on APEC . . . . . . . . . . . . . . . . . . . . . . . . . 26Issues for the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Proposed Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Potential Senate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Financial Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28APEC as Vehicle for Promoting a FTAAP . . . . . . . . . . . . . . . . . . . . . 28

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Progress on the Doha Round . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Focus on Human Security Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Competition for Regional Influence . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Appendix A: Annotated Chronology of Past APEC Meetings . . . . . . . . . . . . . . 30

List of Figures

Figure 1. APEC Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4Figure 2. APEC and World Export Growth (1970=100) . . . . . . . . . . . . . . . . . . 19Figure 3. APEC and World Import Growth (1970=100) . . . . . . . . . . . . . . . . . . 20

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1 P.L. 109-163, section 1234(b).2 P.L. 109-163, section 1234(c)(4).3 “Press Briefing on the President’s Trip to Australia and the APEC Summit by SeniorAdministration Officials,” U.S. Department of State, August 30, 2007.

Asia Pacific Economic Cooperation (APEC)and the 2007 Meetings in Sydney, Australia

Introduction

The Asia Pacific Economic Cooperation (APEC) has been identified by bothCongress and the Bush Administration as an organization that may help promote theU.S. goal of liberalizing international trade and investment in Asia, and possibly therest of the world. In addition, because of the unique nature of APEC’s membershipand organization, the association provides a forum at which the United States canhold bilateral discussions on non-economic matters such as international security andhuman rights.

As one indicator of congressional interest in APEC, in the National DefenseAuthorization Act for Fiscal Year 2006 (P.L. 109-163), Congress called for thePresident to develop a comprehensive strategy to address the “emergence of Chinaeconomically, diplomatically, and militarily; promote mutually beneficial traderelations with China; and encourage China’s adherence to international norms in theareas of trade, international security, and human rights.”1 It continues by specifyingthat this comprehensive strategy should “identify and pursue initiatives to revitalizeUnited States engagement in East Asia.” The act then states, “The initiatives shouldhave a regional focus and complement bilateral efforts. The Asia Pacific EconomicCooperation forum (APEC) offers a ready mechanism for pursuit of suchinitiatives.”2 [emphasis added]

The notion that APEC may be an effective forum for advancing U.S. interestsin Asia is apparently shared by the Bush Administration. During a White House pre-trip press briefing on August 30, 2007, National Security Council Senior DirectorDennis Wilder stated, “The importance that the President attaches to APEC isdemonstrated by the fact that he has not missed an APEC leaders meeting sincetaking office.”3

In addition, senior administration officials indicate that the White House seesAPEC as a model for regional economic integration in the Asia Pacific which allowsthe United States to play a significant role in the region’s political and economicdevelopment. Some members of the Association of Southeast Asian Nations

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4 ASEAN members include Brunei Darussalam, Burma (Myanmar), Cambodia, Indonesia,Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. 5 It currently consists of 21 “member economies” — Australia, Brunei Darussalam, Canada,Chile, Chinese Taipei (Taiwan), Hong Kong (China), Indonesia, Japan, Malaysia, Mexico,New Zealand, Papua New Guinea, the People’s Republic of China, Peru, the Republic ofKorea, the Republic of the Philippines, the Russian Federation, Singapore, Thailand, theUnited States, and Vietnam. The members of APEC are referred to as economies ormembers — not nations or countries — due to the concurrent membership of Hong Kong,the People’s Republic of China, and Taiwan. 6 The complete text of the Bogor Goals is available on APEC’s web page at[http://www.apec.org/apec/leaders__declarations/1994.html].

(ASEAN)4 have been actively pursuing alternative “Asian only” models for regionaleconomic development, including “ASEAN + 1” (ASEAN and China), “ASEAN +3” (ASEAN, China, Japan, and South Korea), and the East Asia Summit (EAS), alsoknown as “ASEAN + 6” (ASEAN, Australia, China, India, Japan, New Zealand, andSouth Korea).

The Bush Administration’s interest in APEC may bring up the regional forumbefore the 110th Congress in several ways. First, Congress may choose to considerthe level of direct and indirect financial support provided to APEC. Second,Congress may take into account U.S. commitments to APEC when consideringlegislation on various trade and non-trade issues. Third, Congress may increaseoversight of APEC-related activities and programs of the U.S. Trade Representative,the Department of State and other federal departments and agencies.

Although both Congress and the Bush Administration view APEC as importantto U.S. trade and economic and human security interests in the Asia, it is uncertainthat APEC is a reliable mechanism for advancing those interests and if Congress andthe Bush Administration share a common view of what the U.S. interests in Asia are.In particular, the organizational and operational structure of APEC is unusual amongmultilateral associations, reflecting an atypical approach to trade liberalization. Asa result, APEC’s approach, organization, and operations may make it difficult for theUnited States to promote its positions on various issues through its activities inAPEC.

APEC’s Approach to Trade Liberalization

APEC is an association of 21 “member economies”5 bordering the PacificOcean that are working cooperatively to promote economic growth and prosperity inthe Asia-Pacific region. During the 1994 meetings in Bogor, Indonesia, APECestablished the “Bogor Goals” of “free and open trade and investment in theAsia-Pacific by 2010 for industrialized economies and 2020 for developingeconomies.”6 These goals have been reaffirmed at the Leaders’ Meeting eachsubsequent year.

APEC began in 1989 as an Australian initiative — backed by Japan and NewZealand — in recognition of the growing interdependence among Asia-Pacific

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7 For a more detailed discussion of APEC and the concept of “open regionalism,” seeChristopher M. Dent, New Free Trade Agreements in the Asia-Pacific, Palgrave MacMillan,2006.8 See [http://www.apec.org/apec/leaders__declarations/1994.html].9 The complete text of the 1995 Leaders’ declaration and a link to the Osaka Action Agendais available on APEC’s web page at [http://www.apec.org/apec/leaders__declarations/1995.html].

economies and in response to the free-trade areas that had developed in Europe andNorth America. It is the only international trade organization in which Hong Kong,mainland China, and Taiwan are all members.

In contrast to most other multilateral organizations, APEC is a cooperativeforum in which members arrive at decisions via consensus. All commitments madeby members are voluntary; APEC has no formal enforcement mechanisms to compelmembers to comply with any trade liberalization policies previously declared atAPEC meetings — an approach often referred to as “open regionalism.”7 Point 9 ofthe 1994 “APEC Economic Leaders’ Declaration of Common Resolve” states,“APEC economies that are ready to initiate and implement a cooperative arrangementmay proceed to do so while those that are not yet ready to participate may join at alater date.”8

The underlying notion of the APEC approach to trade liberalization is thatvoluntary commitments are easier to achieve and more likely to be implemented thanobligatory commitments derived from agreements negotiated by more traditional —and potentially, confrontational — methods. By establishing a common vision orgoal for the organization, the belief is that future APEC discussions can make morerapid progress towards the organization’s goals by seeking consensus views withwhich members are willing to comply.

By contrast, trade agreements negotiated according to more traditionalapproaches tend to foster confrontation and expectations of reciprocal concessions.Lacking a shared goal or objectives, it may be difficult to resolve differences amongthe parties and complete an agreement. Later on, if any party to the agreement feelsthat it was inequitable, they may fail to comply with the terms of the agreement, orwithdraw from the agreement in its entirety, even if there are formal sanction orgrievance provisions within the agreement.

APEC strives to meet the Bogor Goals in three “broad areas” of cooperation.

First, members consult with each other to formulate individual and collective actionsto liberalize merchandise and service trade, as well as international investment.Second, members discuss their domestic regulations and procedures to find ways offacilitating international business. Third, the members engage in “Economic andTechnical Cooperation,” or ECOTECH, to provide training and foster greatercooperation among APEC members.

In 1995, APEC created a template to achieve the Bogor Goals in its “OsakaAction Agenda.”9 The Osaka Action Agenda emphasizes APEC’s “resoluteopposition to an inward-looking trading bloc that would divert from the pursuit of

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10 In 2006, the United States seconded Scott Smith to work with the APEC Secretariat.11 The Leaders’ Meetings are technically not summits because of the presence of Hong Kongand Taiwan, whose leaders are not officially heads of state.

global free trade” by accepting a set of fundamental principles for APEC’s trade andinvestment liberalization and facilitation. These principles includecomprehensiveness; WTO consistency; comparability; non-discrimination;transparency; flexibility; and cooperation.

APEC Organization and Operation

APEC’s unusual approach to trade liberalization is reflected in its organizationand operation. APEC’s organization consists of a small Secretariat in Singapore,which reports to the constituents of five separate groups: the preeminent Leaders’Meeting, the APEC Business Advisory Council, the Ministerial Meeting, the SectoralMinister Meetings, and the Senior Officials Meetings. The Secretariat, in turn,supervisors the work of six different groups: the Committee on Trade andInvestment, the Economic Committee, the Steering Committee on ECOTECH, theBudget and Management Committee, Special Task Groups, and Working Groups.Each member of APEC seconds representatives to work on the Secretariat’s staff toserve as program directors.10

The focal point of APEC activities is the annual Leaders’ Meeting in which theAPEC leaders set goals, publicize them, and provide momentum for the process.11

This is usually held in October or November of each year, and is attended by headsof state except for those from Taiwan and Hong Kong who, because of China’s

Figure 1. APEC Organization

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12 U.S. representatives to ABAC are: Spencer Kim, Chairman of CBOL Corporation; andMichael Phillips, Chairman of Russell Investment Group.

objections, send other representatives. The first Leaders’ Meeting was held in 1993on Blake Island, near Seattle, Washington.

Major decisions are generally affirmed and/or announced at the Leaders’Meeting. The meeting also provides a platform for and gives momentum to majorAPEC initiatives. Although APEC confines its agenda primarily to economic issues,the leaders often hold bilateral meetings during the Leaders’ Meeting to discussinternational security, human rights, and other issues.

Most of the decisions announced at the Leaders’ Meeting are first consideredin a series of Ministerial Meetings held throughout the year. These include therespective ministers dealing with trade, finance, transportation, telecommunications,human resources development (education), energy, environment, science andtechnology, and small and medium-sized enterprises. The largest ministerial is theannual Joint Ministerial Meeting which precedes the Leaders’ Meeting. It usually isattended by foreign trade or commerce ministers from member states. The variousMinisterial Meetings make recommendations to the Leaders’ Meeting; they do nothave the authority to act independently on behalf of APEC.

Working under the direction of the various APEC ministers, the Senior Officialscoordinate the activities of the various committees, working groups and task forceswithin APEC. Senior Officials Meetings are held three or four times a year. Thecurrent U.S. Senior Official for APEC is Ambassador Patricia M. Haslach.

The APEC Business Advisory Council (ABAC) consists of up to threeindividuals appointed by each APEC member. It provides advice on implementingthe APEC agenda and other specific business-related issues.12 ABAC also can makecomments on the recommendations of the various Ministerial Meetings.

Most of the specific tasks before APEC are addressed in committees, workinggroups, or expert groups that deal with economic issues of importance to the region.For implementing the Bogor goals, the Committee on Trade and Investment plays thekey role. APEC has ten working groups that work on specific areas of cooperationand facilitation: (1) Trade and Investment Data, (2) Trade Promotion, (3) IndustrialScience and Technology, (4) Human Resources Development, (5) EnergyCooperation, (6) Marine Resource Conservation, (7) Telecommunications, (8)Transportation, (9) Tourism, and (10) Fisheries. Each working group has one ormore shepherds (members) who take responsibility for coordinating the work of thegroup.

The APEC chair rotates annually and since 1989 has been held by (in order):Australia, Singapore, South Korea, Thailand, the United States, Indonesia, Japan, thePhilippines, Canada, Malaysia, New Zealand, Brunei, People’s Republic of China,Mexico, Thailand, Chile, South Korea, and Vietnam. In 2007, Australia was onceagain the APEC chair, with the Leaders’ Meeting held on September 8-9 in Sydney.

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Decisions within APEC’s various organizational bodies are based on theconsensus approach of APEC. Most committees, working groups, and special taskgroups have representatives from all 21 members, and select their leadership fromamongst themselves. Members may delay or refrain from any action recommendedor approved by a meeting, committee, working group or special task force withoutfacing sanctions or recriminations from other members. However, all decisions andagreements of the various meetings, committees, and working groups must beimplemented in accordance with the Osaka Action Agenda.

APEC actions take place at three levels: actions by individual members; actionswith the confines of APEC; and collective APEC actions with respect to othermultinational organizations. The primary form of individual member actions are the“Individual Action Plans,” or IAPs. Each year, APEC members submit at theMinisterial Meeting an IAP that spells out what steps the member has taken and/orwill take to advance their trade regime towards the achievement of the Bogor Goals.IAPs typically are organized along both sectoral (e.g., architectural services) andtopical (e.g., customs procedures) lines. Although members cannot impose changeson each other’s IAPs, the Osaka Action Agenda calls on each member to consult,submit, and review the IAPs to foster comparability, transparency, and cooperationamongst the IAPs.

The internal actions of APEC generally involve research on topics related totrade liberalization, the exchange of best practices, and the standardization of policiesand procedures related to international trade and investment. In some cases, APECwill create a working group on a particular topic, with the goals of generating a“collective action plan,” or CAP. In some cases, the CAPs are little more than atopical summary of the member IAPs; in other cases, the working group plays a moreactive role in promoting trade liberalization and facilitation via the CAPs.

Another example of an APEC’s internal action is the “APEC Business TravelCard,” an idea advanced by the ABAC. Business travelers possessing an APECBusiness Travel Card are allowed fast-track entry and exit through special APEClanes at major airports, and multiple, visa-free entry amongst members that recognizethe card.

Collective actions of APEC usually involve joint or coordinated efforts toadvance trade and investment liberalization in other multilateral organizations. Mostrecently, APEC’s collective actions have focused on helping complete the DohaRound of the WTO. For example, following the 2006 Leaders’ Meeting in Hanoi,APEC released a statement on the “Doha Development Agenda of the WTO” thataffirmed the members’ “collective and individual commitments to concluding anambitious and balanced WTO Doha agreement” by each member “moving beyondour current positions in key areas of the Round.” The key areas mentioned were“trade-distorting farm support,” “market access in agriculture,” “real cuts inindustrial tariffs,” and “new openings in services trade.”

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13 “2006 Leaders’ Declaration,”14th APEC Economic Leaders’ Meeting, 18-19 November2006; available at: [http://www.apecsec.org.sg/apec/leaders__declarations/2006.html].14 The full text of the Leaders’ declaration on the climate change is available at:[http://www.apec2007.org/documents/Declaration%20Climate%20Change.pdf].

Results of the 2007 Meetings in Sydney

In January 2007, Australia assumed the chair of APEC, and was the host for thevarious APEC meetings held throughout the year. Following the meetings in 2006,various goals were suggested for 2007, including “further studies on ways and meansto promote regional economic integration.”13 The official theme for the APEC 2007meetings was “Strengthening Our Community, Building a Sustainable Future.”

In the runup to the events in Sydney, the host country indicated that the mainfoci for the meetings would be climate change and regional economic integration.These themes were echoed in pre-event statements by several other APEC members,including China. Successful conclusion of the Doha Round negotiations, energysecurity, and counter-terrorism efforts were other major topics raised by membersprior to the meetings in early September.

Outcomes of the Major Meetings

The major APEC meetings for 2007 were held in Sydney in September. The15th APEC Economic Leaders’ Meeting was held on September 8 and 9; the U.S.delegation was headed by President George W. Bush. The 19th APEC MinisterialMeeting was held on September 5 and 6; the U.S. delegation was headed bySecretary Rice.

Consistent with past practices, a Leaders’ joint declaration and a ministerialjoint statement were released after their respective meetings. Both documentsfocused on a limited number of topics, which generally reflected the goals establishedfor 2007 at the end of the 2006 APEC meetings. What follows is a topical summaryof APEC’s achievements for 2007 as presented in the two documents.

Climate Change, Energy Security, and Clean Development. The issueof climate change became the top topic for the 2007 Economic Leaders’ Meeting.In a separate joint declaration on the subject, the economic leaders agreed that“economic growth, energy security and climate change are fundamental andinterlinked challenges for the APEC region.”14 The leaders reaffirmed theircommitment to the United Nations Framework Convention on Climate Change andstated their support for a post-2012 international climate change arrangement toreplace the expiring Kyoto Protocol. With the exception of Australia, BruneiDarussalam, and the United States, all APEC members are parties to the KyotoProtocol.

The APEC members pledged to take four specific actions on climate change.First, they set “an APEC-wide regional aspirational goal of a reduction in energyintensity of at least 25 percent by 2030 (with 2005 as the base year). Second, APEC

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15 The full text of the Leaders’ statement on the WTO negotiations is available at:[http://www.apec2007.org/documents/Statement%20on%20the%20WTO%20Negotiations.pdf].16 A copy of the ministers’ report on regional economic integration is available online at:[http://www.apec2007.org/documents/Strengthening%20Regional%20Economic%20Integration.pdf].

members will attempt to increase forest coverage by at least 20 million hectares ofall types of forests by 2020. Third, they agreed to create an Asia-Pacific Network forEnergy Technology (APNet) to strengthen collaboration on energy research. Fourth,APEC will also establish an Asia-Pacific Network for Sustainable ForestManagement and Rehabilitation.

WTO Negotiations. For the third year in a row, the APEC Leaders issued aseparate statement on the ongoing WTO negotiations.15 Their joint statementmaintains that the negotiations “offer unparalleled potential to create a better tradingenvironment.” In addition, the APEC leaders “insist that consensus will only bepossible on the basis of an ambitious, balanced result that delivers real andsubstantial market access improvements for agricultural and industrial goods and forservices and real and substantial reductions in trade-distorting agricultural subsidies.”

The joint statement on WTO negotiations ends with a call for all APECmembers to participate in the continuing talks in Geneva, and to resume negotiationsbased on the draft texts tabled by the chairs of the negotiating groups on agricultureand non-agricultural market access.

Regional Economic Integration and Free Trade Agreements. Incontrast to the 2006 meetings in Hanoi, the topic of regional economic integrationwas not the leading issue for the 2007 APEC meetings. The economic leaders“welcomed and endorsed” a report submitted by the APEC ministers entitled,“Strengthening Regional Economic Integration.”16 In their report, the ministersreaffirmed APEC’s commitment to the Bogor Goals and their support for a“multilateral trading system.” To that end, they stated that APEC’s priority was thesuccessful conclusion of the Doha Round, but that APEC also supported regionaleconomic integration through “high-quality and comprehensive” regional tradeagreements (RTAs) and free trade agreements (FTAs), including the possible long-term prospects for forming a “Free Trade Area for the Asia-Pacific (FTAAP).”

Trade and Investment Liberalization and Facilitation. The annualLeaders’ and Ministerial Meetings are generally the occasions at which APECmembers submit an update on their individual IAPs, and committees and workinggroups submit their CAPs. The meetings also provide an opportunity for APEC toprovide guidance on which areas of trade liberalization and facilitation are of thegreatest interest among the member economies.

In their joint declaration, the Leaders endorsed three specific areas where APECmembers have agreed to “accelerate efforts” to promote trade and investmentliberalization and facilitation: (1) Reducing barriers to trade and investment throughFTAs and RTAs; (2) Improving the regional business environment; (3) Facilitating

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17 Joint Declaration of the 15th APEC Economic Leaders’ Meeting, September 9, 2007.18 Joint Statement of the 19th APEC Ministerial Meeting, September 5-6, 2007.19 Canada and Russia are not currently members of the APEC Business Travel Card Scheme.20 The separate chapters of the U.S. IAPs — as well as the IAPs for all the other membereconomies — are available at [http://www.apec-iap.org/].21 For an overview of GSP, see CRS Report RL33663, Generalized System of Preferences:Background and Renewal Debate by Vivian C. Jones.22 For an list of existing U.S. bilateral trade and investment agreements, see “2007 TradePolicy Agenda and 2006 Annual Report,”on the USTR’s web page: [http://www.ustr.gov/Document_Library/Reports_Publications/2007/2007_Trade_Policy_Agenda/Section_Index.html].

integration of the such sectors as transportation, telecommunications, mining, andenergy.17

In 2007, the Ministers “welcomed” the completion of seven “IAP PeerReviews” by Australia, China, Hong Kong, Japan, New Zealand, South Korea andTaiwan. They also “endorsed the revised CAPs being implemented by all APECmembers in pursuit of APEC’s free trade and investment goals.”18 They also“welcomed” APEC’s 2nd Trade Facilitation Action Plan that was endorsed at aMinisters Responsible for Trade (MRT) meeting in July 2007. The action plan setout a framework for reducing trade transaction costs by 5% by 2010.

The Ministers expressed their pleasure at Mexico and the United States joiningthe APEC Business Travel Card Scheme, increasing the number of APEC membersparticipating in the program to 19.19 However, the United States is considered atransitional member. Business travelers from APEC member economies to the UnitedStates are still required to present a valid passport and visa (if required by U.S. law).APEC Business Travel Card holders are provided expedited visa interviews andentitled to use “fast-track” immigration lanes (typically the lanes designated for flightcrews) at U.S. international airports.

The United States cited a few new advances in trade and investmentliberalization and facilitation in its 2007 IAP.20 First, the United States designatedEast Timor and Liberia as “beneficiary developing country” under the GeneralizedSystem of Preferences (GSP), in order to foster trade with both nations.21 Second,the United States concluded a number of bilateral free trade agreements and bilateralinvestment treaties (BITs) lowering trade and investment barriers.22 In addition, thebilateral trade agreements with Bahrain and Morocco and a bilateral investmenttreaty with Uruguay went into force in 2006, as well as the multilateral U.S.-CentralAmerican-Dominican Republic (CAFTA-DR) Free Trade Agreement. In general, theUnited States maintains that it has very few trade and investment barriers that preventits achievement of the Bogor Goals.

Prior to the meetings in Sydney, during an APEC Budget and ManagementCommittee meeting in Singapore, the United States announced it was going

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23 “United States Contributes $2.3 Million to Support APEC Projects,” Office of theSpokesman, U.S. Department of State, August 2, 2007.

contribute $1.5 million to APEC’s Trade and Investment Liberalization andFacilitation Special Account and a total of $800,000 to the APEC Support Fund.23

Human Security. Over the last few years, APEC has expanded its agenda toconsider issues of “human security,” principally on issues related to terrorism,disease and natural disasters. Besides the obvious direct suffering of the victims,APEC sees threats to human security as undermining international trade, economicdevelopment, and prosperity.

A new item added to the list of threats to human security in 2007 was productsafety. In their joint declaration, the Leaders “agreed to the need to develop a morerobust approach to strengthening food and consumer product safety standards andpractices in the region, using scientific risk-based approaches and without creatingunnecessary impediments to trade.” The Leaders directed the Ministers to work onthis priority issue.

On the subject of terrorism, the Leaders “reaffirmed our commitment todismantle terrorist groups, eliminate the danger posed by the proliferation of weaponsof mass destruction, and to protect our economic and financial systems from abusefrom terrorist groups.”

Concerning threats posed by disease, the Leaders focused their efforts on thepotential risk of pandemics and combating the spread of HIV/AIDS. The Leadersreiterated APEC’s commitment to build regional preparedness to respond to potentialpandemics. Also, they endorsed guidelines for the creation of a supportive workplaceenvironment for workers living with HIV/AIDS.

Natural disasters were also a priority during the Sydney meetings. Since the2004 tsunami, the possible consequences of another major natural disaster hascontinued to be a concern in the region. In December 2005, Congress passed the“Tsunami Warning and Education Act” (P.L. 109-424), which authorizes increasedU.S. funding for the tsunami warning system in the Pacific over the next five years.

Finally, the Leaders identified “high and volatile energy prices” as an ongoingeconomic risk to the region, and that the risk can “best be met by expanded trade andinvestment to boost supply and greater efficiency in use.”

Strengthening APEC. Besides the preceding economic and trade issues, theLeaders raised one administrative issue in their joint declaration — the need to makeAPEC more efficient and responsive. To that end, the Leaders established the APECSupport Unit and transferred the appointment of the Executive Director to a fixedterm.

Also, in order to “maintain APEC’s momentum,” the Leaders decided tocontinue its current moratorium on new members until at least 2010. The newmember moratorium was seen as a blow to India, who is considered a leading

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24 “India to Remain Outside APEC until at least 2010,” IST, September, 9, 2007. The articleis not specific on he meaning of the ambiguous term, “western members.”25 The full text of President Bush’s speech to the APEC Business Summit is available at:[http://www.whitehouse.gov/news/releases/2007/09/print/20070907.html].26 The press release of the announcement and a copy of the “APEC Code of Conduct forBusiness” is available online at: [http://www.apecsec.org.sg/apec/news___media/media_releases/060907_aus_bizcodeconduct.html#].

candidate for the next round of new APEC members. According to a source on thePhilippine delegation, “western members” opposed India joining APEC because ofits political and economic strength, but were open to the admission of “smallercountries” such as Colombia and Panama.24 Other economies that have expressedan interest in joining APEC are Burma, Cambodia, Ecuador, Laos, Macau, Mongolia,Pakistan, and Sri Lanka.

Other Important Developments. In his speech to the APEC’s businesssummit, President Bush spoke at some length about the development of democracyin Asia.25 According to President Bush, “The expansion of freedom and democracyin the Asia Pacific region is one of the great stories of our time.” After noting thatat the end of World War II, Australia and New Zealand were the only democracieson the western side of the Pacific, he pointed out that 60 years later, East Timor,Indonesia, Japan, the Philippines, South Korea, and Taiwan are now democracies.Later on in his speech, President Bush called for efforts to bring democracy to Burmaand North Korea; and said that the United States looked forward to “free and fairelections” in Thailand. He also spoke of “encouraging Russia’s leaders to respect thechecks and balances that are essential to democracy” and working with China’sleaders to use the opportunity of the 2008 Olympics to demonstrate “a commitmentto greater openness and tolerance.”

Following his summary of democracy in Asia, President Bush proposed “thecreation of a new Asia Pacific Democracy Partnership.” As he described it,“Through this partnership, free nations will work together to support democraticvalues, strengthen democratic institutions, and assist those who are working to buildand sustain free societies across the Asia Pacific region.” No details were providedin the speech or following the speech on the membership or financing of the AsiaPacific Democracy Partnership.

The annual Leaders’ and Ministerial Meetings are also an occasion for APECto release new reports and make important announcements. The 2007 meetingscontinued this tradition. During the Ministerial Meeting, APEC announced thepublication of its “Code of Conduct for Business” as part of its ongoing anti-corruption campaign.26 It was also announced that APEC had accepted the offers ofthe United States and Russia to host the 2011 and 2012 meetings respectively. The2008 meetings are to be held in Lima, Peru, on November 22 and 23.

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27 For more information on U.S.-Australia relations, see CRS Report RL33010, Australia:Background and U.S. Relations, by Bruce Vaughn.28 “U.S.-Australia Defense Trade Cooperation Treaty,” White House fact sheet, September6, 2007.29 “President Bush and Australian Prime Minister Howard Discuss U.S.-Australia DefenseTrade Cooperation Treaty in Joint Press Availability,” White House Office of the PressSecretary, September 4, 2007.

Noteworthy Bilateral Meetings

The annual APEC Leaders’ Meeting also provides a rare opportunity for theU.S. President to hold bilateral meetings with a number of important governmentleaders at one location. In particular, the annual APEC gathering is the one timewhen top officials from China, Hong Kong, and Taiwan are attending the same event.As a result, it has not been unusual for the U.S. President to schedule a series ofbilateral meetings during the week of the APEC Leaders’ Meeting.

In 2007, President Bush continued the tradition of bilateral meetings. Duringhis time in Sydney, he met with Australia’s Prime Minister John Howard, China’sPresident Hu Jintao, Indonesia’s President Susilo Bambang Yudhoyono, Japan’sPrime Minister Shinzo Abe, Russia’s President Vladimir Putin, and South Korea’sPresident Roh Moo-Hyun. In addition, President Bush hosted a working lunch withthe leaders from seven members of the Association of Southeast Asian Nations(ASEAN) that are also members of APEC — Brunei Darusaalam, Indonesia,Malaysia, the Philippines, Singapore, Thailand, and Vietnam. What follows is asummary of President Bush’s bilateral meetings.

Australia and Prime Minister Howard.27 The bilateral meeting betweenPresident Bush and Prime Minister Howard was originally scheduled to occur afterthe Leaders’ Meeting. However, President Bush’s controversial decision to leaveearly meant the bilateral meeting was moved forward to September 4, 2007. Therescheduling of the bilateral meeting, and President Bush’s early departure,apparently caused some friction between Australia and the United States prior to thestart of the APEC events.

The main announcement made following the September 4, 2007 meetingbetween President Bush and Prime Minister Howard was the signing ofU.S.-Australia Defense Trade Cooperation Treaty. A White House summary of theterms of the treaty indicates that most U.S. and Australian military articles would beable to be exported within a “circle” consisting of the U.S. government, theAustralian government, and specific defense companies in both nations without priorgovernment approval.28 President Bush indicated that he intended to submit thetreaty to the U.S. Senate for approval after his return to the United States.

In addition to the new treaty, the two leaders held what Prime Minister Howardcalled “a very broad-ranging discussion.”29 Prime Minister Howard commented inparticular on the topics of climate change and conditions in the Middle East(including Iraq, Iran and the Israeli-Palestinian situation). President Bush’s

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30 For more information about U.S.-China relations, see CRS Report RL33877, China-U.S.Relations: Current Issues and Implications for U.S. Policy, by Kerry Dumbaugh.31 For more information about U.S.-Indonesia relations, See CRS Report RL32394,Indonesia: Domestic Politics, Strategic Dynamics, and American Interests, by BruceVaughn.32 For more information about terrorist organizations operating in Indonesia, see CRS ReportRL32394, Indonesia: Domestic Politics, Strategic Dynamics, and American Interests, byBruce Vaughn.33 For more information about U.S.-Japan relations, see CRS Report RL 33436, Japan-U.S.Relations: Issues for Congress, by Emma Chanlett-Avery, Mark E. Manyin, and WilliamH. Cooper.

comments on their meeting focused on the new treaty and the situations in Iraq andAfghanistan. He also raised concerns about the recent demonstrations in Burma andwhat he characterized as “tyrannical behavior” by the nation’s military government.

President Bush held a separate meeting with Australia’s opposition Labour Partyleader, Kevin Rudd, on September 6, 2007. When asked about the intent of themeeting prior to President Bush’s departure for Sydney, State Department officialspointed out similar meetings with opposition party leaders in the past, and that thePresident Bush’s primary objective would be to explain the importance of Australiakeeping its troops in Iraq. Many political observers in Australia expect the LabourParty to win the next parliamentary elections, and believe Mr. Rudd may beAustralia’s next Prime Minister.

China and President Hu.30 The meeting between President Bush andChina’s President Hu Jintao occurred on September 6, 2007. In his summary of themeeting, President Bush highlighted their talks on North Korea, Sudan, climatechange, and economic and trade relations. He also mentioned that the subjects ofproduct safety, exchange rates, and religious freedom were raised during the meeting.Summarizing their conversation as “candid and friendly,” President Hu focused hiscomments on climate change, Taiwan, the Korean Peninsula, the Iranian nuclearissue, and Sudan.

Indonesia and President Yudhoyono.31 The main topic of the meetingwas what President Bush called Indonesia’s “struggle against extremism” — anindirect reference to the Jemaah Islamiah (JI) and other terrorist organizations orseparatist movements operating in Indonesia.32 The two presidents also spoke aboutthe importance of military-to-military cooperation between Indonesia and the UnitedStates, pointing out the value of a recent U.S. visit by Indonesian military officers.President Bush also complemented Indonesia’s efforts on climate change,highlighting their efforts in forest and coral reef preservation.

Japan and Prime Minister Abe.33 In what proved to be his last officialmeeting with President Bush, Prime Minister Abe summarized the main topics oftheir discussion of September 8, 2007, as being climate change, the fight againstterrorism, and the importance of the Japanese-American military refueling operation

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34 For more information about U.S.-Russia relations, see CRS Report RL33407, RussianPolitical, Economic, and Security Issues and U.S. Interests, by Stuart D. Goldman.35 For more information about U.S.-South Korea relations, see CRS Report RL33567,Korea-U.S. Relations: Issues for Congress, by Larry A. Niksch.36 “President Bush Meets with South Korean President Roh,” White House Office of thePress Secretary, September 7, 2007.37 “United States Cooperation with Southeast Asia,” fact sheet, White House Office of thePress Secretary, September 7, 2007.

in the Indian Ocean. In his summary, President Bush echoed the topics mentionedby Prime Minister Abe, and added energy security to the list.

Russia and President Putin.34 Following their meeting on September 7,2007, President Putin indicated that their conversation had covered a range of topics,including missile defense, Russia’s WTO accession plans, Iran’s nuclear program,and environmental issues.

South Korea and President Roh.35 President Bush and South KoreanPresident Roh Moo-Hyun met on the afternoon of Friday, September 7, 2007. Thetwo discussed a wide range of topics, including the six-party talks with North Koreaand the situation in Iraq. The pending U.S.-Korea Free Trade Agreement was notmentioned in a White House summary of the content of the meeting.

The official post-meeting statements by both presidents focused on the talkswith North Korea and the prospects for the end of the Korean War. At apost-meeting press conference, President Roh asked President Bush to “be a little bitclearer in your message” on a supposed U.S. declaration to end the Korean War.President Bush responded, “I can’t make it any more clear, Mr. President. We lookforward to the day when we can end the Korean War. That will end — will happenwhen [North Korean President] Kim Jong-Il verifiably gets rid of his weaponsprograms and his weapons.”36

The brief exchange was the subject of discussion in the international media andamong Korea analysts. Some speculate that President Bush had omitted an agreedupon statement in his summary of the meeting and President Roh was reminding himof the missing statement. Others have speculated that President Roh attempted topress the issue in hopes of obtaining a stronger statement on the subject from the U.S.President. There have also been claims that the exchange was the result of atranslation error during the Presidents’ meeting. Whatever the cause, PresidentRoh’s break with the usual post-meeting protocol, and the apparent irritation itcaused President Bush, was viewed by many as another example of lingering tensionsbetween the two presidents.

ASEAN Leaders. During the working lunch on September 7, 2007, PresidentBush announced his decision to create the position of Ambassador to ASEAN.37 He

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38 Ibid.39 “Press Briefing by Deputy Press Secretary Dana Perino and Senior AdministrationOfficials,” White House Office of the Press Secretary, September, 7, 2007.40 For details, see CRS Report RL33479, Burma-U.S. Relations, by Larry A. Niksch.41 Analysis in this section is based on publicly available materials from various ExecutiveBranch agencies and conversations with senior trade officials in the Bush Administration.

also stated his intention to host a meeting in the United States to celebrate 30 yearsof U.S.-ASEAN relations.38

President Bush’s invitation to ASEAN members to a meeting to be held inTexas raised questions about the possible attendance by Burma. During a pressconference held on September 7, 2007, U.S. Deputy National Security Advisor JimJeffrey stated, “we’ll work out the level of attendance of the various countries,including, hypothetically, the attendance of Burma, at another time.”39 The UnitedStates currently has a ban on economic and trade relations with Burma.40

Assessment by the Bush Administration41

To the Bush Administration, the key outcomes of the APEC meetings in Sydneywere: (1) Progress on the development of a FTAAP; (2) The endorsement of theAPEC report on regional economic integration; (3) Agreement on a joint declarationon climate control; and (4) The Leaders’ joint statement on the WTO negotiations.Looking ahead to the 2008 meetings in Lima, Peru, the White House is primarilyconcerned about some hesitance on the part of some of Asian APEC members tofully participate in the meetings.

Progress on a FTAAP. The U.S. proposal to explore the possible creationof a FTAAP was accepted at last year’s APEC Leaders’ Meeting in Hanoi, but inrelatively general terms. In the view of the White House, various elements of thisyear’s APEC meetings indicate progress was being made in obtaining more interestand support for the concept of an FTAAP. In particular, the inclusion of theexploration of a FTAAP as one of the “agreed actions” in the report on regionaleconomic integration was perceived as a qualitative change in APEC’s overallattitude from a year before. In addition, by endorsing the report, the Leaders havegiven a green light to specific research projects described in the report that maybecome a precursor to a larger feasibility study for a FTAAP. However, the BushAdministration is aware that China, Japan, and some ASEAN members remainskeptical about the feasibility and desirability of creating a FTAAP.

Regional Economic Integration. To the Bush Administration, the reporton regional economic integration creates an “umbrella” over much of APEC’s workon trade and investment liberalization, as well as advances the discussion on forminga FTAAP (see above). In addition to its “agreed actions” on the exploration of aFTAAP, the report on regional economic integration includes “agreed actions” on:the promotion of “high-quality, comprehensive RTAs/FTAs”; the reduction of“behind-the-border barriers” to trade and investment; support for structural reformof member economies; the strengthening of financial markets; the improvement of

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42 U.S. Trade Representative Susan Schwab represented the United States at the second dayof the Leaders’ Meeting.

key sectors in APEC (including transportation, mining, and the environment); andcapacity building for APEC’s developing economies. As described by oneadministration official, the “agreed actions” provide APEC with a clearer agenda forits trade and investment liberalization efforts.

Climate Change. The significance of APEC’s joint declaration on climatecontrol is largely in the inclusion of both the United States and China as endorsersof the document. While the environmental objectives in the joint declaration are non-binding, the document does find common ground between China and the UnitedStates on pollution reduction efforts.

WTO Negotiations. Although this year’s joint statement on the WTOnegotiations is considered softer in tone and less specific in content that last year’sstatement, the Bush Administration considers it useful to have all 21 APEC membersendorsing the concept of completing the Doha Round negotiations. In addition, theBush Administration points to the statement’s agreement that the resumption ofnegotiations “on the basis of the draft texts tabled by the chairs of the negotiatinggroups” as a significant outcome.

Concerns about Meetings in Lima. From its inception, there has beenmixed attitude within APEC about the inclusion of members from the eastern rim ofthe Pacific Ocean. For some of the Asian members of APEC, their economic interestand connections to the eastern rim of the Pacific are focused almost exclusively inthe United States. As a result, according to administration officials, it may be difficultfor some Asian members to drum up sufficient domestic support to finance adelegation to the meetings in Lima comparable in size and stature as those sent toAPEC meetings held in Asia. The concern is that reduced representation from Asiamay undermine the ability to make much progress during the 2008 meetings.

Comments from the Media

The early departure of both Secretary Rice and President Bush from theirrespective meetings was heavily discussed by the media. The decision by PresidentBush to depart after the first day of the two-day Leaders’ Meeting42 came only a fewdays before the start of the APEC meetings, and was considered by somecommentators a blow to relations with Australia and counterproductive to U.S.ambitions to forward its agenda during the event. To some analysts, Bush’s earlyarrival did little to counteract the negative impact of the early departure.

In the weeks prior to the APEC meetings, the media ran stories indicating thatmany of President Bush’s top advisors were recommending that he not attend theAPEC meetings at all. The perceived slight to APEC was compounded by PresidentBush’s misstatement in which he referred to APEC as OPEC, and his commentsabout visiting “Austrian troops” in Iraq when he meant “Australian troops.” Inaddition, Secretary Rice’s decision to depart with President Bush, as well as herdecision not to attend the recent ASEAN meetings, exacerbated existing regional

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43 “Press Briefing on the President’s Trip to Australia and the APEC Summit by SeniorAdministration Officials,” U.S. Department of State, August 30, 2007.44 Ibid.45 “Press Briefing by Deputy Press Secretary Dana Perino and Senior AdministrationOfficials,” White House Office of Press Secretary, September 7, 2007.

concerns that the Bush Administration is not giving adequate attention to the AsiaPacific Region.

During the pre-trip press briefing, President Bush’s early departure was thefocus of two questions. The first question asked if the White House was “worried that[it] sends the wrong signal to the region that he is not interested in their concerns, orthat he’s giving short shrift to their concerns.”43 The second question raised concernsthat by not giving “Asia the attention it deserves,” the Bush Administration has“created an opening for China to increase its clout.”44 Senior Director Wilder repliedthat he did not find such criticisms “very credible.” In addition, Deputy NationalSecurity Advisor Dan Price, during a press briefing on September 7, 2007, made thefollowing unsolicited statement:

Now, there’s been a fair amount of chatter in some circles questioning the U.S.commitment to this region. As the President made clear today, as well as in themeetings and as he will make clear, U.S. engagement in APEC is permanent,unshakeable, and growing.45

Besides the perceived inattention to the region as a whole, the late changes inPresident Bush’s schedule supposedly created some tension with Australia and PrimeMinister Howard. According to media accounts, Prime Minister Howard had pressedPresident Bush to remain for both days, or at least designate Secretary Rice as hisreplacement for the second day of meetings. Both requests were unmet by the UnitedStates. In addition, the changes in security arrangements made necessary by Bush’searly arrival and early departure added to the already high $140 million security billfor the event. Prime Minister Howard was already facing sharp domestic criticism forthe high cost and tight security arrangements implemented for the APEC meetings.

The APEC Leaders’ joint declaration on climate control received a mixedresponse by the international media. To some, the fact that the 21 APEC members— including China, Japan and the United States — had agreed to common targets forimprovements in energy efficiency and reforestation was a promising developmentfor the creation of a post-Kyoto Protocol agreement on pollution control. However,others pointed to the voluntary nature of the “aspirational global emission reductiongoals” as proof that the statement has little real value or significance. Othercommentators felt that domestic political forces (for example, Prime MinisterHoward’s concerns about the upcoming elections) had driven APEC’s willingnessto agree to the joint declaration on climate control.

The second major document coming out of the 2007 APEC meetings, the reporton regional economic integration, also was met with a mixed response. Someobservers criticized the report for being too general and too encompassing in content,and as a result, provided little sense of overall direction or guidance for APEC. For

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46 “China Unfazed by Democracy Partnership,” by Stephen de Tarczynki, Inter PressServices News Agency, September 12, 2007.47 “Bush Lauds Taiwan’s Democratic Society,” by Charles Snyder and Jessie Ho, TaipeiTimes, September 8, 2007.

example, they say the report presents the growing number of FTAs and RTAs, thelong-term possibility of forming a “Free Trade Area of the Asia-Pacific,” and thecontinued development of the WTO as forces promoting regional economicintegration, but does not explore the possible tensions between those three trends.Upon closer reading, the report endorses all three approaches to greater trade andinvestment liberalization without discussing potential contradictions that mightensue.

President Bush’s proposal of an “Asia-Pacific Democracy Partnership” (ADP)garnered modest attention in the media and from other APEC members. Accordingto one report, “while China does not welcome the ‘Democracy Partnership,’ ... it isnot overly alarmed either.”46 The press in Taiwan noted, with some apparentpleasure, that President Bush included Taiwan among the examples of democracy inAsia.47 Commentators expressed misgivings about President Bush’s vagueness aboutthe membership and financing of the ADP, and were concerned that some APECmembers might be apprehensive about how their participation in the ADP wouldimpact their relations with China.

APEC and International Trade

The primary goal of APEC is to foster international trade by means of trade andinvestment liberalization and facilitation. Since its inception in 1993 and theadoption of the Bogor Goals in 1994, APEC members have lowered their traderestrictions to varying degrees. With over a decade of history, one question iswhether or not there has been a corresponding rise in APEC members’ foreign tradeaccompanying their liberalization and facilitation efforts.

Assessing APEC’s Impact on Exports and Imports

Figure 2 compares the growth of intra-APEC and total APEC exports to thegrowth of global exports. Starting in 1981, total APEC exports begin growing fasterthan global exports, and intra-APEC exports are outstripping total APEC exports.However, the pace of export growth slows for all three categories in 1995, withnoticeable downturns in APEC exports occurring in 1998 and 2001, correspondingto the Asia financial crisis and the attacks on the World Trade Center and the

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48 For more information on the impact of the Asian financial crisis on world trade, see CRSReport RL30517, Asian Financial Crisis and Recovery: Status and Implications for U.S.Interests, by Richard P. Cronin and CRS Report 98-434, The Asian (Global?) FinancialCrisis, the IMF, and Japan: Economic Issues, by Dick Nanto; for more information aboutthe impact of the attacks on the World Trade Center and the Pentagon on world trade, seeCRS Report RL31617, The Economic Effects of 9/11: A Retrospective Assessment,coordinated by Gail Makinen.

Pentagon.48 Since the downturn in 2001, the pace of world export growth hasincreased, and the pace of APEC export growth has increased even more.

Source: Data from UNCTAD

Import statistics reveal a similar pattern to exports (see Figure 3). From 1970to 1980, there is little difference in the import growth rate for intra-APEC, totalAPEC, and the world. Starting in 1981, APEC’s imports — both from amongst itsmembers and from the world — begin to increase faster than world imports. Thedivergence between APEC import growth and world imports continues until 1997,when the Asian financial crisis precipitates a sharp decline in APEC’s imports andglobal imports in 1998. For the next two years — 1999 and 2000 — global importsand APEC’s imports recover, only to drop once again following the attacks onSeptember 11, 2001. Import levels grew modestly in 2002 for both APEC and theworld, and then accelerated starting in 2003, with APEC’s import growth rateoutstripping that of the world.

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Figure 2. APEC and World Export Growth (1970=100)

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Source: Data from UNCTAD

While the trade data appear to support the notion that APEC has promoted tradegrowth for its members, the results are not conclusive. Although APEC’s exportsand imports have grown at a faster rate than world trade figures since the creation ofAPEC, it is uncertain if its trade growth is the result of trade liberalization andfacilitation, or caused by other economic factors. APEC’s members include severalof the fastest growing economies in the world — for example, China and Vietnam— so the average economic growth rate for APEC members is higher than the globalaverage. APEC’s greater economic growth rate could be sufficient to explain mostof its better trade performance compared to global figures.

However, the fact that intra-APEC exports and imports are growing at a fasterrate than total APEC trade raises concerns about possible trade diversion. On the onehand, the greater growth of intra-APEC trade could be the result of lower intra-APECtrade barriers stemming from the members’ actions via their IAPs and CAPs, and thespread of RTAs and FTAs amongst APEC members. On the other hand, the higherintra-APEC trade expansion could represent the diversion of trade from other nationsas APEC members form preferential bilateral trade agreements that siphon off tradefrom non-APEC members.

APEC as a Vehicle for Liberalizing Trade

Even with its “open regionalism” approach to trade and investmentliberalization, APEC has been seen since its inception as a possible vehicle forliberalizing both regional and global trade. In general, observers focus on twomethods by which APEC may help foster greater trade and investment liberalization.

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Figure 3. APEC and World Import Growth (1970=100)

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49 For a description of the recent growth of BTAs in Asia, see CRS Report RL33653, EastAsian Regional Architecture: New Economic and Security Arrangements and U.S. Policy,by Dick K. Nanto.50 “APEC and Free Trade Agreements in the Asia Pacific,” by Prof. Jane Kelsey. Paperpresented at Asia-Pacific Research Network Policy Conference on Trade, July 11-13, 2005,Hong Kong. Paper available online at [http://www.bilaterals.org/article-print.php3?id_article=2346].51 Kelsey, op. cit.

The first method is by forming a coalition during WTO negotiations. The efforts ofthe APEC Geneva Caucus during the recent Doha discussions are often cited as anexample of how APEC can help promote trade and investment liberalization. Thereis little disagreement among experts that APEC has been a positive force for tradeand investment liberalization within the WTO.

The second method is more controversial. Over the last decade, the number ofAsia-Pacific bilateral trade agreements (BTAs) has grown dramatically.49 However,according to one observer, “The result is a competitive form of liberalization. Asoccurred within APEC itself, there are competing models of FTAs that cannot beintegrated.”50 A reporter described the phenomena as follows:

The trade diplomacy of east Asia has become so blindingly complex that eventhe metaphors are getting muddled. The subtitle of one academic paper on freetrade agreements (FTAs) suggests using “spaghetti bowls as building blocks.”Another describes a “patchwork of bilateral hub-and-spoke FTAs in a noodlebowl.”

According to some experts, the growth of bilateral trade agreements (BTAs)amongst APEC members represents an unsystematic process that could lead to theformation of an APEC-wide regional trade agreement (RTA) much like the proposedFTAAP. According to this view, the actions of APEC — via the IAPs, CAPs, andthe various committee reports — forms a commonality of perspective on issues,thereby permitting some members to conclude limited BTAs. The idea is that overtime, the network BTAs will form the basis for the creation of a RTA.

However, other experts view the proliferation of BTAs as forming a barrier totrade and investment liberalization. As described by one scholar, “The resulting webof agreements and negotiations is fragmented, uncoordinated, and uneven in contentand coverage.”51 Because many BTAs are politically (not economically) motivated,the emerging BTAs in Asia generally suffer from several problems — WTO-incompatibility; narrow sector focus; discriminatory rules of origin (ROOs) — thatmake future amalgamation of the BTAs nearly impossible. As one expert describesit:

The predictable results of foreign policy-driven FTA negotiations light oneconomic strategy are bitty, quick-fix sectoral deals. Politically sensitive sectorsin goods and services are carved out.... Little progress is usually made in tacklingdomestic regulatory barriers.... Finally, the sway of power politics can result in

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52 “FTAs and the Prospects for Regional Integration in Asia,’ by Razeen Sally. ECIPEWorking Paper, No. 1, 2006.53 “A Complex Curse: East Asia Exposes the Limits of the Regional,” by Alan Beattie,Financial Times, Nov. 13, 2006.54 “Put Effort into Doha Ahead of Proliferating Bilateral Deals,” by Dr. Christopher M.Dent. Financial Times, Nov. 21, 2006, p. 12.55 Sally, op. cit.56 An example of this view is C. Fred Bergsten’s speech, “The Free Trade Area of the Asia-Pacific Is the Next Step Forward for APEC (and for the World Trading System),” presentedto APEC’s CEO Summit on Nov. 18, 2006 in Hanoi, Vietnam.

highly asymmetrical deals, especially when one of the negotiating parties is amajor player.52

Even if the merger of the various BTAs into an Asia-Pacific RTA wereaccomplished, there are concerns that the resulting agreement would institutionalizea number of tariff and non-tariff trade barriers in the region. A U.S. trade officialwas quoted as saying, “Bilateral FTAs being pursued by China, and Japan, and Koreato some extent, risk falling to the lowest common denominator. As someone oncequipped, ‘they are neither F, nor T, nor A.’”53

Some observers go on to argue that the rising number of BTAs in the region isgenerating dynamics that are preventing the formation of a FTAAP and progress inthe Doha Round, despite the best efforts of APEC. One scholar writes:

I note how the current discussions with the Asia-Pacific Economic Cooperation(APEC) forum to establish a Free Trade Area of the Asia-Pacific (FTAAP),”writes one scholar, “was also proposed at APEC’s Santiago summit just twoyears ago. It failed then as it will probably fail now because of the immensepolitical and technical challenge of harmonizing a large number of heterogeneousbilateral FTAs into a unified regional agreement.”54

Another scholar is even more dismissive of APEC’s potential, writing, “It cannot beexpected to contribute anything serious to regional economic integration.”55

Others see a slightly different effect of the BTAs on prospects for the creationof a FTAAP.56 In this view, the stalled Doha Round is fostering the furtherdisintegration of the global trading system, generating a rising number of BTAs, andincreasing the risk of the creation of a discriminatory and undesirable East Asia FreeTrade Area (EAFTA). The fear is that the EAFTA would become another barrier tothe completion of the Doha Round, and possibly generate protectionist reactions fromthe European Union and the United States.

To counteract these trends, some experts say APEC should push for the creationof a FTAAP. In this view, advancing the idea of a FTAAP, APEC might improve theprospects for the Doha Round, as non-APEC members may prefer to see progress atthe WTO over the creation of a FTAAP. However, even if Doha talks remain stalled,discussion of the creation of a FTAAP could limit the growth of BTAs in Asia,and/or help insure that any new BTAs are less discriminatory and WTO-compatible.

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57 Kelsey, op. cit.58 The ASEAN Regional Forum usually meets after the ASEAN Ministerial Conferenceand, in addition to the 10 members of ASEAN, includes the Australia, Canada, China, theEuropean Union, Japan, New Zealand, Russia, South Korea, and United States. For moreinformation about the 1995 discussions, see Moosa, Eugene. Regional Security Remains aTaboo at APEC. Reuters Newswire Service. Nov. 19, 1995.

In summary, supporters of this view see APEC “playing four roles in this newregional dynamic.”57 Those roles are:

1. Organizing regular meetings of regional trade and finance ministers andpolitical leaders to advance the process at the multilateral and bilaterallevels;

2. Reinforcing the ‘Bogor Goal’ of free and open trade and investment by2010/2020 and authenticating neoliberal trade policies;

3. Developing “model measures” for FTAs and RTAs to achieve “highquality” liberalization and consistency; and

4. Promoting WTO-plus FTAs that are consistent with the policy agenda ofthe international and regional financial institutions.

APEC and “Human Security”

Initially, APEC was viewed as a purely economic forum. APEC carefully keptits distance from political matters for fear that such issues would cause divisionswithin the group — particularly among China, Japan, Russia, Taiwan, and the UnitedStates. Such divisions could thwart cooperation in achieving economic goals.Consideration of non-economic issues was confined to bilateral meetings held beforeand after the Leaders’ Meeting.

In 1995, the issue was raised of whether APEC should be expanded to includeconsideration of regional security issues. The consensus in 1995 among APECmembers seemed to be that regional security issues should be discussed in theASEAN Regional Forum and other fora rather than in APEC.58

Starting in 2001, however, security was added to the official agenda of theLeaders’ Meeting. At the October 2001 Meetings in Shanghai, the attacks on theWorld Trade Center and the Pentagon overshadowed the economic agenda. TheLeaders issued a joint statement condemning the attacks — APEC’s first jointstatement on non-economic issues. Since 2001, the agenda for the Leaders’ Meetinghas included issues related to “human security,” with a focus on three topics:terrorism, disease, and disasters.

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59 For more details about the CTTF, see [http://www.apec.org/apec/apec_groups/som_special_task_groups/counter_terrorism.html].60 Copies of each member’s CTAP are available online at [http://www.apec.org/apec/apec_groups/som_special_task_groups/counter_terrorism/counter_terrorism_action_plans.html].61 For more information about the STAR Initiative, see [http://www.apec.org/apec/apec_groups/som_special_task_groups/counter_terrorism/secure_trade_in_the.html].

Counterterrorism and Secure Trade

Among APEC members, there are four principal areas of concern aboutterrorism. First, some member economies face domestic extremists who episodicallyconduct acts of violence targeted at the civilian population. Second, there is someevidence suggesting that international terrorist networks, including Al Qaeda, areutilizing financial institutions in the Asia-Pacific region to funnel money acrossinternational borders. Third, APEC member economies wish to restrict themovement of suspected terrorists through the region. Fourth, APEC has made thesecurity of trade one of its key priorities. Over the last five years, APEC hasdeveloped programs to respond to each of these concerns.

To oversee its efforts on terrorism, APEC established the Counter-TerrorismTask Force (CTTF) in October 2002. The CTTF reports directly to the APEC’sSenior Officials. Its mission “is to identify and assess counter-terrorism needs,coordinate capacity building and technical assistance programs, cooperate withinternational and regional organizations and facilitate cooperation between APECfora on counter-terrorism issues.”59 The CTTF generally meets quarterly, incoordination with the Senior Officials Meetings. At a meeting held in Cairns,Australia, in July 2007, the CTTF set up a study group to develop a plan to facilitatetrade recovery in the aftermath of a major terrorist event. In addition to the work ofthe CTTF, each APEC member has created a Counter-Terrorism Action Plan(CTAP).60

Much of APEC’s counterterrorism efforts have focused on the issue of securetrade. In 2002, APEC created the “Secure Trade in the APEC Region (STAR)Initiative.” The STAR Initiative is “focused on policies and procedures to enhancesecurity and efficiency in the APEC region’s seaports, airports and other accesspoints, including port and airport security; shipping container security; coastal patrol;capacity building; financial assistance, and private sector initiatives.”61 The mostrecent STAR Conference, held in Sydney on June 27 and 28, 2007, focused onenhancing security and safety while containing costs.

Diseases

In 2003, APEC established its ad hoc Health Task Force (HTF) to deal with thethreats posed by emerging infectious diseases. In part, the HTF was created inresponse to the February 2003 outbreak of Severe Acute Respiratory Syndrome(SARS) in several APEC member economies. Not only did the people of severalAPEC members suffer serious health problems due to SARS, the economies of both

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62 For a study on the economic effects of SARS, see “Globalization and Disease: The Caseof SARS,” by Jong-Wha Lee and Warwick J. McKibbin, Brookings Discussion Papers inInternational Economics, February 2004. Available online at [http://www.brookings.org/views/papers/mckibbin/20040203.pdf].63 A copy of the document, “Guidelines for APEC Member Economies for Creating anEnabling Environment for Employers to Implement Effective Workplace Practices forPeople Living with HIV/AIDS and Prevention in Workplace Settings,” is available onlineat: http://aimp.apec.org/Documents/2007/SOM/SOM3/07_som3_013.doc

SARS-infected and non-infected members were harmed by the loss of tourism.62 Thevalue of having the HTF was confirmed in 2004, with the outbreak of avian influenzaH5N1 in 2004. Besides its responses to SARS and avian influenza, APEC is alsoconcerned about the threat posed by HIV/AIDS. During the second Senior OfficialsMeeting in 2007, APEC endorsed the transformation of the Health Task Force to theHealth Working Group (HWG) in 2008.

Most of APEC’s efforts on disease have focused on the exchange of medicalinformation and research, building a rapid-response and containment program, andthe exchange of “best practices.” For SARS and avian influenza, APEC has held aseries of meetings to discuss means of more rapidly identifying and responding topossible outbreaks, and sharing “best practices” in areas such as passenger screeningtechniques and safeguarding measures for poultry. Regarding HIV/AIDS, APEC’sHTF is fostering the exchange of information on members’ programs to prevent thespread of the disease, and improving workplace management of HIV/AIDS.

The second APEC Health Ministers Meeting was held on June 7 and 8, 2007,in Sydney, Australia. During the meeting, the health ministers released APEC’sguidelines for employers to create a workplace environment supportive for workerswith HIV/AIDS.63

Natural Disasters

The third form of threat to human security of great concern to APEC are naturaldisasters. In December 2004, a 9.3 earthquake off the coast of Indonesia propagateda devastating tsunami that killed thousands of people in several nations bordering theIndian Ocean. Although there was a tsunami warning system in place, many peoplewere not warned of the impending natural disaster and fell victim to the tsunami.

In response to the Indian Ocean tsunami, APEC Senior Officials adopted inMarch 2005 an “APEC Strategy on Response to and Preparedness for NaturalDisasters and Emergencies.” They also established APEC’s “Task Force forEmergency Preparedness (TFEP).” Working with APEC’s Industrial Science andTechnology Working Group (ISTWG), the TFEP has held a number of seminars andtraining sessions to help APEC members improve their seismic monitoring systems,disaster response infrastructure, building and infrastructure construction codes, andpublic education systems to reduce their exposure to natural disasters.

APEC members are also providing additional funding to natural disasterwarning systems. In December, Congress passed P.L. 109-424, the “Tsunami

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64 H.R. 1674, Section 3(2).65 The United States provides indirect support for APEC programs and activities on a case-by-case basis through discretionary funds from various federal departments and agencies.The exact level of indirect support is unknown.66 Language now codified into U.S. Law under Title 10, Subtitle A, Part IV, Chapter 148,Subchapter VI, section 2540.

Warning and Education Act.” The act, signed by the President on December 20,2006, authorizes additional funding to “enhance and modernize the existing PacificTsunami Warning System to increase coverage, reduce false alarms, and increase theaccuracy of forecasts and warnings....”64 It authorizes $25 million in FY2008, andthen authorizes an increase in funding by $1 million each year until FY2012.

Implications for Congress

Congress — and the Bush Administration — have identified APEC as theprimary regional institution in the Asia-Pacific for promoting open trade and practicaleconomic cooperation. APEC is also seen as a useful forum for advancing U.S.concerns on issues related to human security.

Since APEC’s inception in 1989, congressional interest and involvement withAPEC has focused on two areas: (1) direct and indirect financial support for APEC;and (2) oversight of U.S. participation in APEC.

Previous Congressional Actions on APEC

Section 424 of the Foreign Relations Authorization Act, Fiscal Years 1994 and1995, authorized the President to maintain United States membership in the Asia-Pacific Economic Cooperation and provided for U.S. contributions of APEC out ofappropriations for “Contributions to International Organizations.” The Science, State,Justice, Commerce, and Related Agencies Appropriations Act of 2006 appropriateda total of $1.17 billion “to meet annual obligations of membership in internationalmultilateral organizations,” including APEC. The current level of direct U.S.financial support for APEC is $601,000 per year.65

Section 2540 of the National Defense Authorization Act for Fiscal Year 1996made “a non-communist country that was a member nation of the Asia PacificEconomic Cooperation (APEC) as of October 31, 1993” eligible to participate in aloan guarantee program “arising out of the financing of the sale or long-term leaseof defense articles, defense services, or design and construction services.”66

The Federal Agriculture Improvement and Reform Act of 1996 (P.L. 104-127)included a finding by Congress that:

... during the period 1996 through 2002, there will be several opportunities forthe United States to negotiate fairer trade in agricultural products, includingfurther negotiations under the World Trade Organization, and steps towardpossible free trade agreements of the Americas and Asian-Pacific Economic

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67 Language now codified into U.S. Law under Title 7, Chapter 41, Subchapter IV, section1736r. 68 Language now codified into U.S. Law under Title 31, Chapter, Subtitle IV, Chapter 53,Subchapter II, section 770.69 The House and Senate passed separate resolutions — H.Res. 422 and S.Res. 203 — thatmention APEC in passing, “... its seat as a permanent member of the United NationsSecurity Council and on the Asia-Pacific Economic Cooperation, China is an emergingpower....”

Cooperation (APEC); and the United States should aggressively use theseopportunities to achieve more open and fair opportunities for trade in agriculturalproducts.67

In the Intelligence Reform and Terrorism Prevention Act of 2004 (P.L. 108-458), Congress finds:

... other economic and regional fora, such as the Asia-Pacific EconomicCooperation (APEC) Forum, and the Western Hemisphere Financial Ministers,have been used to marshal political will and actions in support of combating thefinancing of terrorism (CFT) standards.68

Finally, the National Defense Authorization Act for Fiscal Year 2006 (P.L. 109-163) included as the sense of Congress:

that the President should present to Congress quickly a comprehensive strategyto — (1) address the emergence of China economically, diplomatically, and militarily;(2) promote mutually beneficial trade relations with China; and(3) encourage China’s adherence to international norms in the areas of trade,international security, and human rights.

To be included in that strategy are “[a]ctions to encourage United States diplomaticefforts to identify and pursue initiatives to revitalize United States engagement inEast Asia. The initiatives should have a regional focus and complement bilateralefforts. The Asia-Pacific Economic Cooperation forum (APEC) offers a readymechanism for pursuit of such initiatives.”

Issues for the 110th Congress

For the 110th Congress, issues related to APEC could arise in a variety of directand indirect ways. In addition to the issue of U.S. financial support for APEC,Congress may choose to express its sense on different policy issues. Also, there areoversight issues raised by U.S. participation in various APEC activities.

Proposed Legislation. In the 110th Congress, one proposed bill specificallymentions APEC — the United States-China Diplomatic Expansion Act of 2007 (H.R.3272).69 Introduced by Representative Mark Kirk, and cosponsored byRepresentatives Rick Larsen, Steve Israel, Susan Davis, and Charles Boustany, H.R.3272 would authorize the appropriation in FY2008 of $65 million for theconstruction of a new consulate in China, $10 million for additional personnel for the

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70 “Statement on the WTO Negotiations,” 15th APEC Economic Leaders’ Meeting,September 9, 2007.71 See CRS Report RL33934, Farm Bill Proposals and Legislative Action in the 110thCongress, by Renee Johnson, Geoffrey S. Becker, Ralph M. Chite, Tadlock Cowan, RossW. Gorte, Charles E. Hanrahan, Remy Jurenas, Jim Monke, Jean M. Rawson, Randy

(continued...)

U.S. diplomatic mission in China, $6 million for other State Department personnel,$10 million for various Chinese language programs, and $2 million for rule of lawinitiatives in China. The bill also would authorize the appropriation of $3 million fora U.S. contribution to APEC.

Potential Senate Action. As previously mentioned, the U.S.-AustraliaDefense Trade Cooperation Treaty signed during the APEC meetings would besubject to the approval of the Senate, once submitted to the Senate by the President.In addition, if and when the President nominates someone to be “Ambassador toASEAN,” the appointment would be subject to Senate advice and consent.

Financial Support. The most direct issue would be the level of U.S. financialsupport for APEC. Although the President does have the authority under currentfederal law to determine the level of APEC’s funding without action by Congress,Congress may choose to take up this issue (see above). For example, Congress couldconsider setting funding levels, directly or indirectly, for APEC’s trade facilitationprograms independently from the amounts announced in August 2007.

APEC as Vehicle for Promoting a FTAAP. Congress has recognized thepotential of APEC as a vehicle for promoting free trade. In addition, to the issue ofa possible Free Trade Area of the Asia-Pacific, negotiations over regional tradeintegration under APEC would likely raise issues related to labor rights andenvironment protection, and whether the United States would be able to respond toforeign country violations of labor or environmental standards with economicsanctions or monetary fines (as stipulated in the U.S.-Singapore/Chile FTAs).

Progress on the Doha Round. Successful completion of the Doha Roundis a major trade priority for the Bush Administration. However, negotiations arecomplicated, in part by the U.S. merchandise trade deficit, especially bilateral tradedeficits with some APEC member economies. While many economists attribute theU.S. trade deficit to U.S. macroeconomic conditions, when combined with specifictrade disputes with some APEC members, prospects for adjustments in the U.S. offeron Doha are uncertain.

The 2006 Leaders’ joint declaration called on all APEC members — includingthe United States — “to spare no efforts to break through the current deadlocks.”This year’s “Statement on the WTO Negotiations” takes a slightly softer tone, statingthat “consensus will only be possible on the basis of an ambitious, balanced resultthat delivers real and substantial market access improvements for agricultural andindustrial goods and services, and real and substantial reductions in trade-distortingagricultural subsidies.”70 This would likely require congressional action on specificlegislation.71 In particular, the farm income and price support programs, which are

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71 (...continued)Schnepf, Jasper Womach, Jeffrey A. Zinn, and Joe Richardson.

dictated primarily by Title I of the 2002 farm bill (P.L. 107-171) and expire in 2007,might be affected by efforts to complete the Doha Round.

This touches on the broader domestic debate over whether the United Statesshould continue to pursue the liberalization of international trade and investment withother nations, the effect of trade and globalization on import-sensitive industries, andwhether increased trade threatens or enhances U.S. prosperity, employmentopportunities, and economic security.

Focus on Human Security Issues. In addition to the various economicand trade issues, Congress may also consider issues pertaining to human security asa result of the U.S. involvement with APEC. For example, U.S. recognition of theAPEC Business Travel Card could raise domestic security concerns to the expeditedvisa and entry privileges extended to card bearers. Similarly, concerns about apotential influenza pandemic may engender interest in providing more support toAPEC’s Health Task Force.

Competition for Regional Influence. From a geopolitical perspective,APEC is a leading forum through which the United States can broadly engage theAsia-Pacific region. The United States is not included in the other regionalmultilateral associations, such as ASEAN and the newly-created East Asian Summit(EAS), and no other forum includes such a wide range of Asian economies. Froma strategic perspective, many experts believe APEC could plan a useful role inadvancing U.S. interests in Asia.

Over the last few years, the United States’ position as the leader in the regionhas been challenged by China. China’s accession to the WTO, its recent efforts tonegotiate BTAs across Asia (including the Comprehensive Economic PartnershipAgreements with Hong Kong and Macau), and its unilateral liberalization of its traderegime, has arguably placed China as a competitor to the United States.

Many argue that the United States should re-energize its involvement in Asiantrade discussion and elevate the importance of APEC to reassert U.S. leadership.They advocate both increased financial assistance to APEC, though the annualcontribution and specific assistance programs, and alteration in U.S. laws andpolicies on key issues. Others say that APEC should reformulate its mission byfocusing more narrowly on trade facilitation and economic integration, abandoningmany of the working groups that are not central to the core goals, and strengtheningthe Secretariat. The annual Leaders’ Meeting continues to provide prestige and offeran opportunity for heads of state, particularly those of smaller countries, to interactwith top U.S. officials. APEC offers the additional benefit of including Taiwan andHong Kong as member economies, unlike the EAS.

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Appendix A: Annotated Chronology of Past APEC Meetings

The following table provides a brief summary of the past APEC Meetings. Formore details about each meeting, see the official APEC web page,[http://www.apec.org/].

Year and Location Key Outcomes

1989 - Canberra,Australia

Concept of forming APEC is discussed at an informalMinisterial-level dialogue group with 12 members.

1993 - Blake Island,U.S.A.

First formal APEC Leaders’ Meeting includes representativesfrom 14 members: Australia, Brunei Darussalam, Canada, China,Hong Kong, Indonesia, Japan, New Zealand, Philippines,Singapore, South Korea, Thailand, and United States.

1994 - Bogor,Indonesia

APEC sets the Bogor Goals of “free and open trade andinvestment in the Asia-Pacific by 2010 for developed economiesand 2020 for developing economies.”a

1995 - Osaka, Japan APEC adopts the Osaka Action Agenda (OAA) which providesa framework for meeting the Bogor Goals.b

1996 - Manila, thePhilippines

The Manila Action Plan is adopted, which outlines the trade andinvestment liberalization and facilitation measures to be taken byAPEC members to reach the Bogor Goals.c The APEC economiessubmit their first “Individual Action Plans,” or IAPs, indicatinghow they intended to move toward fulfillment of the Bogor goals.Moreover, APEC Leaders called for conclusion of theInformation Technology Agreement in the WTO, which acted asa decisive catalyst toward successful completion of thisagreement in 1997.

1997 - Vancouver,Canada

Several APEC members are coping with a severe recessioncaused by the Asian Financial Crisis.d APEC ministers reject aJapanese-backed proposal to establish a separate Asian fund toprovide financial support for countries coping with financialdifficulties. However, APEC does endorse a proposal for EarlyVoluntary Sectoral Liberalization (EVSL) in 15 sectors, anddecides that Individual Action Plans should be updated annually.

1998 - KualaLumpur, Malaysia

President Clinton does not attend because of the imminentbombing of Iraq. Economic recession continues for severalAPEC members, with varying levels of hardship. MalaysianPrime Minister Mahathir Mohamad, host of the APEC meetings,continues criticism of trade and investment liberalization, whichhe blames for causing the Asian Financial Crisis and hiscountry’s deep recession. APEC agrees on the first nine sectorsfor EVSL and seeks an EVSL agreement with non-APECmembers at the World Trade Organization.

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Year and Location Key Outcomes

1999 - Auckland,New Zealand

APEC meetings occur earlier than usual because the World TradeOrganization’s Ministerial Conference is to be held in Seattle onNovember 30-December 3, 1999. The APEC leaders endorsedthe launching of a new WTO round of multilateral tradenegotiations and agreed that the new round of trade negotiationsto be concluded within three years. The APEC Meetings occursat a time of increasing violence in East Timor; APEC leaders putpressure on Indonesia to allow international peacekeepers intoEast Timor. APEC commits to paperless trading by 2005 indeveloped economies and 2010 in developing economies. APECBusiness Travel Card scheme is approved.

2000 - Bandar SeriBegawan, BruneiDarussalam

APEC establishes an electronic Individual Action Plan (e-IAP)system, providing IAPs online. APEC also states that Chinashould be accepted into the WTO soon, followed by Taiwan andsometime later by Russia and Vietnam. Following a bilateralmeeting, the United States and Singapore announce that theywould begin negotiations on a bilateral free trade agreement.e

2001 - Shanghai,China

Meeting is held five weeks after the attacks on the World TradeCenter and Pentagon. APEC adopts the Shanghai Accord, whichfocuses on Broadening the APEC Vision, Clarifying theRoadmap to Bogor and Strengthening the ImplementationMechanism. The e-APEC Strategy is adopted, which sets out anagenda to strengthen market structures and institutions, facilitateinfrastructure investment and technology for on-line transactionsand promote entrepreneurship and human capacity building. Aleaders’ statement on counterterrorism is the first issued byAPEC dealing explicitly with a non-economic topic. In thestatement, the leaders condemned the attacks on the UnitedStates, committed themselves to preventing and suppressing allforms of terrorists acts in the future, to enhance counterterrorismcooperation, and take appropriate financial measures to preventthe flow of funds to terrorists.

2002 - Los Cabos,Mexico

APEC adopts a Trade Facilitation Action Plan, agreeing toreduce transaction costs in international trade by 5% by 2006.Policies on Trade and the Digital Economy and TransparencyStandards are adopted. The leaders also declare support for theDoha negotiations (including the abolition of agricultural exportsubsidies) and call for their conclusion by January 1, 2005. Inconjunction with the Mexico APEC Meetings, the United Statesannounced the Enterprise for ASEAN Initiative, a new tradeinitiative with the Association of Southeast Asian Nations.APEC’s second Counter-Terrorism Statement is delivered, alongwith the adoption of the Secure Trade in the APEC Region(STAR) Initiative.

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Year and Location Key Outcomes

2003 - Bangkok,Thailand

APEC issues first separate statement on Doha negotiations. TheAPEC ministers in attendance call for the reopening of thenegotiation process based on the text of the unsuccessfulproposal made during the WTO talks in Cancun, Mexico. APECpledges to take specific actions to dismantle terrorist groups,eliminate the danger of weapons of mass destruction andconfront other security threats. Members sign up to the APECAction Plan on SARS and the Health Security Initiative to furtherprotect personal security. The Leaders’ statement calls for moresix-party talks and for North Korea to demonstrate “verifiable”progress in dismantling its nuclear weapons program.

2004 - Santiago,Chile

APEC issues second statement on Doha Round, settingDecember 2005 as target date for completion of negotiations.APEC adopts “Best Practices” guidelines to ensure that FTAsand RTAs fully comply with or exceed WTO guidelines. APECestablishes an Anticorruption and Transparency (ACT) programto aid members in fighting corruption and increasingtransparency; the United States is among the seven membereconomies funding the program.

2005 - Busan, SouthKorea

APEC adopts the “Busan Roadmap,” which include deadlines forreducing transaction costs and developing a plan for structuralreform to make member economies more business-friendly. The21 leaders issue a special statement regarding the Dohanegotiations encouraging member economies to exercise “thenecessary flexibility” to resolve “the current impasse inagricultural negotiations, in particular in market access.” TheUnited States, Canada, and Australia push for the statement tosingle out the European Union for their protectionist measures,but other APEC members demur. Special attention is given tothe threat of a pandemic influenza stemming from the incidencesof avian flu in both birds and humans.

2006 - Hanoi,Vietnam

APEC initiates a study of regional economic integration toinclude consideration of U.S.-proposed Free Trade Area of theAsia-Pacific. The APEC Leaders issue a separate declaration onthe Doha Round talks, calling for deeper reductions in trade-distorting farm subsidies and increasing market access for goodsand services. The United States announces it will startrecognizing the APEC Business Travel Card in 2007.

a. The complete text of the Bogor Goals is available on APEC’s web page at[http://www.apec.org/apec/leaders__declarations/1994.html].

b. The complete text of the 1995 Leaders’ declaration and a link to the Osaka Action Agenda isavailable on APEC’s web page at [http://www.apec.org/apec/leaders__declarations/1995.html].

c. The complete text of the 1996 Leaders’ declaration, including the Manila Action Plan is availableon APEC’s web page at [http://www.apec.org/apec/leaders__declarations/1996.html#Manila].

d. See CRS Report RL30272, Global Financial Turmoil, the IMF, and the New FinancialArchitecture, by Dick K. Nanto.

e. See CRS Report RL31789, Singapore-U.S. Free Trade Agreement, by Dick K. Nanto.